Business Insider's personal finance team compared PenFed Credit Union CD rates to the best CD rates and found them to be a standard offering.
PenFed Credit Union's CDs have higher rates than average, but other online banks and credit unions offer better rates. That being said, PenFed Credit Union could be a good option if you're looking for a Coverdell Education CD.
Learn more about Pentagon Federal Credit Union CDs below.
Current PenFed CD Rates
PenFed Money Market Certificate Rates
PenFed Credit Union Money Market Certificates are the credit union's standard CDs, and their interest rates range from 3.00% to 3.65% annual percentage yield.
You'll need to pay a $1,000 minimum opening deposit to open one of these CDs.
Here's a full breakdown of PenFed Credit Union CD rates:
| Term | APY |
| 6 months | 3.00% |
| 1 year | 3.65% |
| 15 months | 3.65% |
| 18 months | 3.60% |
| 2 years | 3.55% |
| 3 years | 3.40% |
| 4 years | 3.20% |
| 5 years | 3.20% |
| 7 years | 3.00% |
PenFed IRA CD Rates
PenFed Credit Union IRA Certificates have an interest rate range of 2.90% to 3.55% APY and a $1,000 minimum opening deposit.
PenFed IRA CD rates are good, but the best IRA CD rates are even more competitive right now.
| Term | APY |
| 1 year | 3.55% |
| 2 years | 3.45% |
| 3 years | 3.30% |
| 4 years | 3.10% |
| 5 years | 3.10% |
| 7 years | 2.90% |
PenFed Coverdell Education CD Rates
PenFed Credit Union Coverdell Education Certificates have a low $500 minimum opening deposit and an APY range of 2.90% to 3.55% APY.
You can invest up to $2,000 annually in a PenFed Credit Union Coverdell Education CD. Here are the current PenFed Credit Union rates for each term.
| Term | APY |
| 1 year | 3.55% |
| 2 year | 3.45% |
| 3 year | 3.30% |
| 4 year | 3.10% |
| 5 year | 3.10% |
| 7 year | 2.90% |
Overview of PenFed CDs
PenFed Credit Union offers standard CDs, IRA CDs, and unique Coverdell Education CDs.
The credit union's standard CDs are called Money Market Certificates. Term lengths range from 6-month CDs to 7-year CDs.
If you're unfamiliar with an IRA CD, it's a type of retirement account that lets you invest money in a CD. This type of CD suits people who expect to retire in a few years because it's secure and low-risk. PenFed Credit Union IRA certificates range from 1 year to 7 years.
PenFed Credit Union also has Coverdell Education Certificates. This is a type of custodial account parents can open for minors to help pay for educational expenses. It has a lower minimum opening deposit than the credit union's other types of CDs.
PenFed CD Rates Pros and Cons
PenFed CD Pros
- Relatively good interest rates
- Many CD term options
- Most CDs compound dividends daily and pay them monthly
- Anyone can become a member of PenFed
- A+ rating from the Better Business Bureau
PenFed CD Cons
- Many online institutions pay even higher rates right now
- Potentially large early withdrawal penalties
- 6-month CDs do not compound dividends
PenFed CD Alternatives
PenFed CDs vs. Navy Federal CDs
Navy Federal CD rates range from 1.50% to 4.05% APY on standard CDs, so the best choice between Navy Federal Credit Union and PenFed Credit Union could come down to which term you want. With Navy Federal Credit Union, you can choose a term from three months to seven years, and rates are tiered based on the amount of your deposit.
Navy Federal Credit Union pays an even higher rate — 3.55% to 4.30% APY — on the Navy Federal Credit Union EasyStart℠ Certificate. An EasyStart Certificate only requires a $50 deposit (much less than the $1,000 required for PenFed Credit Union CDs).
Membership eligibility isn't as easy with Navy Federal Credit Union as it is at PenFed Credit Union, though. To join Navy Federal Credit Union or open its CDs, you must be an active duty or retired military service member, veteran, Department of Defense employee, or immediate family member of a military member.
Navy Federal Credit Union Review
PenFed CDs vs. USAA CDs
The higher CD rate between these two institutions, which are both some of the best military banks and credit unions, depends on which term you choose. USAA Fixed Rate CD rates are decent on several terms; it pays up to 2.25% APY. USAA offers more term options than PenFed Credit Union, with terms as short as 30 days.
The downside of USAA is that membership is not open to just anyone. You must be a U.S. military member, veteran, precommissioned officer, or spouse or child of a current USAA member.
Who is Eligible for PenFed CDs?
Though PenFed Credit Union was originally designated for only customers with military ties, that is no longer the case. Now, it's a credit union anyone can join, regardless of military status, simply by opening a savings account and depositing $5. Once you've opened the savings account, you're free to open a CD.
Aside from CDs, you can also get PenFed credit cards, PenFed personal loans, and PenFed mortgages.
What Influences PenFed CD Earnings
Choosing a CD at the right time can help you lock in a competitive rate. Be mindful of national CD trends to get the most out of PenFed Credit Union CD earnings.
Since CDs also pay fixed interest rates, you should maintain funds in an account until CD maturity. Otherwise, an early withdrawal charge can take away from your total interest earnings.
We'll explain more about how these factors affect your CD earnings below.
Role of the Federal Reserve
The Federal Reserve has a committee in charge of managing the federal funds rate. Banking products, including CDs, are impacted if the federal funds rate changes and market trends. You'll see CD rates rise when the federal funds rate goes up and CD rates drop when the federal funds rate goes down.
Staying informed about when the next Fed meeting will take place can help you monitor any potential changes regarding the federal funds rate.
Reaching CD Maturity
PenFed Credit Union CDs have the following early withdrawal penalties:
- For a 6-month term, the penalty is 90 days of dividends earned
- For terms longer than 6 months, the penalty is either the last 365 days of dividends earned (if withdrawal is made within the first year) OR 30% of the gross amount of dividends earned if the CD had reached its full term (for withdrawals made beyond the first year)
If you withdraw from a PenFed Credit Union IRA CD before you're 59 1/2, you'll pay additional penalties. IRA CDs usually charge a 10% penalty for withdrawals made before you are 59 1/2.
Long-term CDs can let you lock in a good interest rate for longer if you expect CD rates to drop down the line, but experts say choosing a CD that matches a financial goal can help you avoid penalties.
If you do want to open a longer-term CD, but you're afraid of accruing early withdrawal penalties, a CD ladder might be a good choice for you. The CD ladder strategy has you open multiple CDs with different term lengths instead of just one.
For example, if you want to open a 3-year CD, you would instead open a 2-year CD, a 3-year CD, and a 4-year CD. This means you'll get access to some of your money sooner in case of emergencies, but you'll be locking in a good interest rate for even longer.
PenFed CDs vs. Other Deposit Accounts
PenFed CDs vs. high-yield savings accounts
If you don't want to pay early withdrawal penalties, a high-yield savings account might be a better option for you. Many of the best high-yield savings accounts offer better interest rates than PenFed Credit Union CDs, and you'll be able to withdraw your money at any time.
The major downside to high-yield savings accounts is that they offer variable interest, which means you aren't locked into a specific interest rate. In comparison, CDs offer fixed interest rates. If interest rates fall, your savings account rates will likely fall as well. And average savings account interest rates are significantly lower than PenFed Credit Union CD rates.
The Pentagon Federal Credit Union Premium Online Savings Account offers a lower interest rate than PenFed Credit Union Money Market Certificates do, with an interest rate of 2.90% APY. Most of PenFed Credit Union's specialty CDs offer higher rates, too.
PenFed CDs vs. money market accounts
Money market accounts are pretty similar to high-yield savings accounts, but they tend to have slightly higher interest and more ways to withdraw money from the account, although you'll still be limited in how many times you can withdraw money each month.
Money market accounts are also variable rate accounts. They also tend to have requirements to earn the highest interest rates, such as by keeping a certain amount of money in the account.
The Pentagon Federal Credit Union Money Market Savings account offers a very low interest rate of 0.05% to 0.15% APY. This is under the average money market account rate. If you want to open a money market account, you might want to go with another financial institution.
PenFed CDs vs. treasury bonds
Treasury bonds aren't deposit accounts, they're bonds. This means you're buying debt that you'll earn a fixed interest rate on over time. With treasury bonds, you're buying debt directly from the U.S. government, so these are a very safe type of bond.
Bond term lengths last for decades, while even long-term CDs generally have term lengths under 10 years. Which one you're interested in will likely depend on your investment strategy and the time window you want your savings goal to hit.
Should You Invest in a PenFed CD?
PenFed Credit Union CDs may be a good option if you want a CD that pays a high interest rate. Other banks and credit unions pay even higher rates right now, but PenFed Credit Union CDs might be worth it if you have other accounts at PenFed Credit Union and want to do all of your banking with the same company.
Why You Should Trust Us: How We Reviewed PenFed CDs
To review PenFed Credit Union CDs, we used Business Insider's certificate of deposit methodology, which considers interest rates, minimum deposit requirements, CD term variety, miscellaneous features, and early withdrawal penalties. We also look at the credit union's overall ethics, security, and the quality of its mobile app and customer service.
We use a weighted average to get our star rating, which means we weigh certain features, like interest rates and fees, at a higher weight percentage than others. We understand that these areas can more heavily impact a person's overall banking experience.
PenFed CD Rates FAQs
No, PenFed Credit Union CD rates aren't very competitive. PenFed Credit Union CD rates are much higher than national average CD rates, but they aren't the highest rates out there right now. Some of the best online banks pay even better rates.
Yes, PenFed Credit Union CD rates can change often. PenFed Credit Union CDs often fluctuate because CD rates are influenced by the Fed's decisions. When there's a rate hike or rate cut, the CDs will go up or down accordingly.
PenFed Credit Union early withdrawal penalties are 90 days of dividends for 6-month CDs. For longer term lengths, early withdrawal penalties are 100% of dividends if you withdraw in the first year and 30% of what that money would have earned in dividends at maturity, not to exceed total dividends earned, if you withdraw after the first year.
Yes, PenFed Credit Union CDs are safe. PenFed Credit Union is federally insured by the NCUA, so money in CDs is secure for up to $250,000 per depositor, per account ownership category.
Yes, it is easy to become eligible for a PenFed Credit Union CD. PenFed Credit Union membership is now open to anyone, regardless of their military ties. To become a member, you just need to fill out a form, open a savings account, and deposit at least $5.
